Pennsylvania’s latest online business tax filing system is getting mixed reviews

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Pennsylvania stopped taking payments last month on its 22-year-old E-Tides online tax filing system and marched the last business taxpayers onto its replacement — myPATH, as in “My Pennsylvania Tax Hub,” intended to simplify filing the state’s many business taxes.

How’s it going? The state and leaders of tax-professional groups say it’s an improvement. But some users and tax professionals say the transition hasn’t been easy.

Warren Hudak, a suburban Harrisburg CPA who heads the Pennsylvania Society of Enrolled Agents, which pushed for streamlining the old system, hasn’t found “systematic problems.”

His group of tax practitioners long complained that the old E-Tides system was complicated and labor-intense. He described myPATH as offering “welcome changes — more transparency, more accuracy, transcripts come quicker, and they approve [tax payments] as they go.”

Blake Shelhamer, who runs a jewelry store in Peddler’s Village in Bucks County, said he never had a problem with the old system, “but with myPATH, they took my money but didn’t apply it to my bill.”

After waiting three hours on one state call line and 40 minutes on a second line, “they said it’s a widespread issue, but there’s nothing they can do. I’ll have to file an appeal,” Shelhamer said. “Even though I have confirmation that I paid, they are still reporting me as delinquent and assessing fees.”

To be sure, hundreds of thousands of individual taxpayers have been using myPATH for personal income taxes and property-tax rebates since it began processing those returns in 2019, two years after Colorado-based Fast Enterprises LLC was contracted to install myPATH. Fast is also behind the GenTax system that serves as the model for more than half of U.S. states.

‘Some oddities’

Since November, at least 17 of Pennsylvania’s business taxes — including the arcane booking agent, consumer fireworks, wine excise, small games of chance and single cigarette taxes, as well as mainstream gross receipts, employee income withholding, and corporate net Income taxes — were added in advance of the final obligatory switch on Feb 24.

Revenue Department spokesman Jeffrey Johnson credited a public-information campaign with speeding acceptance by most of the 400,000-plus business taxpayers who used the old system.

“What we’re hearing is a mixed bag,” said Mitchell Gerstein, senior tax counsel at Isdaner & Co., certified public accountants in Bala Cynwyd. “We have received quite a lot of feedback from clients who struggled to migrate their data from E-Tides to myPATH.”

When a taxpayer is properly plugged in, the new system is “user-friendly,” with plenty of deadline reminders, Gerstein said. But submissions of annual W-2 employee tax forms — to a location that’s hard to find in the system and where it’s harder to confirm that data are correct — has tripped up some users.

When payments have gone astray, taxpayers and pros with problems are directed to online messaging and appeals systems that have been unresponsive. With all the calls piling up, “it’s nearly impossible to reach someone at the Pennsylvania Department of Revenue,” Gerstein said.

Hudak also acknowledged that “there are still some oddities,” including data issues. But he compared Revenue’s update favorably compared with past Pennsylvania IT debacles, such as IBM’s failed workers’ comp system, which resulted in the company settling a state lawsuit for $33 million two years ago.

“Digital transformations present challenges,” PICPA, the state CPAs’ association, said in a statement, adding that it found the Revenue Department responsive. “Overall, the majority of our members have found the transition to be a relatively smooth experience.”

What did $121 million buy?

Like banks and other earlier computer technology users, Pennsylvania struggled to join a string of antiquated computer-based tax systems, built separately for 25 different levies. E-Tides was built by state employees and rolled out in 2000.

The state’s early tax technology was based on the now-outmoded COBOL programming language, which did not permit the sharing of information across tax systems for the many taxpayers who paid more than one kind of tax. Staffers had to compare and add results manually.

In 2010, the Rendell administration gave Accenture, the national consulting group spun out by the former Arthur Andersen accounting firm, a $52 million contract to build a unified system. Revenue spokesman Johnson said the state ultimately paid Accenture $44 million, including for ongoing support.

But under Gov. Tom Wolf, who headed the Revenue Department that hired Accenture, officials realized they would need to do more for users than just consolidate the old systems, Johnson added.

In 2017, the state picked Fast Enterprises to install an online tax system that could be accessed remotely by PCs and mobile phones.

“The Department of Revenue took what Accenture had built and incorporated that business tax system” into the software platform Fast built, Johnson said.

The myPATH contract, originally for five years, renewable in one-year installments, has paid Fast $77 million so far, according to Johnson. Individual taxpayers began accessing the system in 2021, and contract extensions were granted to add business taxes.

From November, when the first online business returns were accepted on myPATH, to mid-February, the Revenue Department said just more than 90% of the business taxpayers who had been using E-Tides had moved onto myPATH.

Having spent $121 million so far to consolidate the tax systems and make them more user-friendly, the department said the new system will save $9.6 million over the next 10 years, compared with running the older system. The value of the benefit to taxpayers and professionals hasn’t been estimated.

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